SOFI

Social Finance, in the context of cryptocurrency, refers to a broad spectrum of financial activities and innovations that integrate social and environmental impact alongside financial returns. The concept encompasses a range of mechanisms, such as venture philanthropy, microfinance, crowdfunding, and social impact bonds, which aim to reshape capital markets and address social and environmental challenges .

The pursuit of social impact in private investments and the quest for private benefits in social investments often intersect, blurring the strict definition of impact investments and social finance. This fusion is particularly evident in initiatives that, while primarily for-profit, contribute to social goals such as reducing inequality and promoting economic development by providing opportunities for wealth creation to those traditionally excluded from banking services .

Social finance is also characterized by its focus on the network of processes, decisions, and institutions that finance the production of public goods with private sector participation, often termed the “third sector” of the economy. This field assesses the feasibility of impact investments, exploring whether the monetary benefits from public goods production with private sector involvement exceed the costs. Impact investments produce goods and services intended to be as non-rivalrous and non-exclusive as possible, aiming to resolve a wide array of social and environmental issues, such as access to clean water, reduction of inequality, human rights protection, and poverty reduction .